George Osborne, the chancellor of the exchequer, has ordered most ministers to carry out the most fundamental review of public spending seen in Britain for a generation, including options for departmental budget cuts of up to 40 per cent.

Perhaps I’m missing something, but the Tories are not defining what waste is, they are not telling council leaders how to cut between 25 and 40 per cent, they are just identifying waste as something to be gotten rid of, for the sake of oncoming and harsh austerity measures.

“The seemingly arbitrary way in which the QCDA and other bodies are being culled without any critical analysis of the impact of removing these functions is not acceptable.

“To put staff at the QCDA on notice of dismissal before the legislation to remove their function has been considered by Parliament is an arrogant and reckless way to conduct Government business.

“The decision is not supported by any detail of how core functions undertaken by the QCDA will be carried out in future and at what cost.”

These cuts to funding show the same level of thinking than do saying to council leaders you get on with it.

Of course what the Tories will say is this is an expression of their trust for local leaders, and my goodness do they want that, when you think how much pressure will be put on local workers set to lose their jobs expressing dismay at the Tories’ budget package.

The Tories don’t appear to have cut on the basis of waste alone, VAT rises seem ideological, they haven’t signed up to any local spending programme such as Total Place to show some method to their madness, but they do look like they are passing the buck to councils themselves.

The choice of choosing between 25 and 40 per cent cuts seems like being shown a table full knives for which one can choose from to stab out ones own eyes.

Lets not skirt about, Tory austerity measures will be laden with ideology, the emergency budget demonstrated that, but yet ways in which to cut waste from local budgets is met with a central vacuum. No matter how dishonest, I wish the Tories would stick with a narrative already.

(I have started using the Tories where I should be using Tory/Lib Dem coalition government quite naturally now, funny that).

In 1974, Edward Heath asked: “Who governs – government or trade unions?”﻿ Speculate as you will on whether you think the re-election of Thatcher five years later answers that question, but the relevant answer today is neither. The third choice is the complexity of the political situation, it is this which has done the most to engender the system more than the above.

For example, it is not for nothing that a repeat of Peter Griffiths‘ campaign, which featured the infamous 10-word slogan: “If you want a nigger for a neighbour, vote Labour,” is unlikely. Politics in this country has changed, and in many ways converged, particularly on issues such as race, culture, religion, gender and sexuality (though there are exceptions to this rule, of course).

In recent times, when austerity measures were not on the menu, harmony could be found between the Tories and Labour on the economy as well. Michael Gove spoke kind words (bordering on sickly) about Tony Blair’s academies, private capital in schools and what a business agenda in schools could bring to the country in the future. David Cameron, too, was derided for not being angry enough with Blair, on economic and other matters, across the room, frankly because Cameron admired Blair, as did most of the shadow cabinet at the time, which can be shown by the waves and cheers by them during his leaving ceremony. Many on the right complained that there was no real or effective opposition, whereas many on left moaned that both parties had merged as one.

Today’s political situation might have realised the conditions for proper political opposition, between the values which both parties were founded upon.

Earlier this week, a report by the thinktank Reform, which is close to the Conservatives, called for a curb on “middle-class welfare”. It proposed reducing spending on child benefit, child tax credit, the winter fuel allowance for pensioners and more. Overall, it called for a £13bn reduction in state benefits.

Meanwhile, Policy Exchange, another thinktank close to the Tories, claimed that billions paid by better-off families in taxation is handed straight back to them in benefits. It found that last year £53.5bn – 32% of all benefits – were paid to families with a higher than average income.

These benefits were based on universal citizenship gifts. The NHS is not a gift afforded only to those who can’t afford it, and private healthcare to those who can, but is universal and free to all users. The child trust fund was another such example; an entitlement initiated by the Labour government free for all and free from means testing. But now it has been decided that perks such as this cannot be afforded any longer.

This will be the thing that properly sets the mainstream parties against each other again and restore them both to their foundations: Labour universalism verus Conservative cuts. And it has to do with the political situation, not political will. Who governs? It’s the economy, stupid.

*

George Osborne has chosen now to cut heavily and not over time steadily. He has chosen this course to deficit reduction over tax rises as well. But in his intellectual toolbox he has peculiar justifications for doing so.

The government is fond of referring to the experience of Canada in the 1990s, where a public sector retrenchment was matched by a private sector boom. Osborne’s seesaw in action. But that experience does not offer a route map for the UK today. It provides a warning. In Canada in the mid-1990s their major export market, the US, was growing strongly. The demand a booming neighbour provided could take the place of government spending, and did so quickly. That is far from the case in the UK today. Our main export market is Europe. Growth there is sluggish. There is a new fiscal austerity across the continent. And that is exactly the problem. Governments, even with relatively modest deficits, are taking demand out of their economies.

Philip Snowden … introduced an “orthodox” budget that cut unemployment benefit and public sector pay at the height of the Depression.

The results were riots in the streets by the unemployed, and a mutiny among sailors in the Royal Navy at Invergordon in Scotland, which virtually crippled the Fleet.

Just as it doesn’t follow that Canada could do it, nor does it follow that just because Snowdon failed that Osborne will. But the question is just how much have his calculations been born of ideology. The debate between cuts and no cuts is a non-question now, but cuts as far as possible should not affect the destitute and low paid.

If Osborne has a Snowden moment, it won’t just ruin his political career, it will ruin the lives of many undeserved people in Britain.

Merkel was actually remaining loyal to the “Stability and Growth Pact” (SGP) originally proposed by the former Finance Minister Theo Waigel at the beginning of the 1990’s and agreed at the EU summit in Dublin in 1997, the purpose of which was to tune the euro so it would be able to compete with the US Dollar and strengthen the stability of the euro-zone.

Now, in January 2010 we might be starting to see some early signs of this European challenge. The UK has had a surprise fall in unemployment figures – which may have part-time jobs to account for.

Two notions at play here need attention; firstly that old Keynesian misunderstanding (see Michael Stewart’s chapter on balance of payments in his book Keynes and After for more information as to why this is a Keynesian misunderstanding) that unemployment is a symbol of too little demand. If part-time work has been used as a means of curbing unemployment, then naturally it is safe to assume productivity won’t increase any more than if half of those numbers were all fully employed, so therefore it is wrong to assume that unemployment in itself is a marker of too little demand (just as it is wrong to assert that rising prices, according to Michael Stewart, is a marker of too much demand).

The French Finance Ministry expects France to lose 71,000 jobs this year, mostly in the first half, despite the fact that the economy is expected to expand by 1.4% in 2010.

One thing is for sure, as it stands, it does look good for Brown, who will be seen, before the election, to have saved people from unemployment, and not doing what the Conservatives would’ve done by – well, nothing at all. Like in Berlin the doing nothing option was taken, and results have shown it to not be favourable.

This, as Larry Elliot put it today in the Guardian, will be a pre-election gift to Brown. Lets just hope he doesn’t have to anything in the mean time that could jeopardise his chances in the run up to an election, like by having to testify to the Iraq enquiry…oh dear!

Much of the week’s events – and day-to-day functioning of finances – has been measured by the pre-budget report. Darling’s point that there is evidence to suggest confidence is growing, in house prices both in the UK and the US, as well as the assurances in the manufacturing industry and therefore gross domestic product, is also what informs Darling that growth will return within the next two years (1-1.5% in 2010 and 3.5% in 2011-12).

There seems to be no reason to doubt that he might believe this, on the notion that confidence is evident, and for this reason the opposition’s charge that Darling’s plan for the tax relief of carers, for example, is all strategic is categorically erroneous. The charge has stemmed from the matter of Darling planning to drop these tax reliefs after the election, if indeed that takes place after April. However, the relief – and other measures for the lesser off – is with the intention to help families when the economy is contracting, and, as Darling predicts, when the economy is on the grow, taxes can be levelled again.

Personally, with this, I would like to see city bonuses capped at a price that afforded the worst off to be protected in line with inflation over the next 4 years (benefits were only at 1.5%, and given that inflation is estimated at 3% without the benefit being linked with inflation, this is a problem that needs to be solved – and soon), but I’m able to hold this judgement without thinking that Darling is holding the poorer electorate to ransom.

I would throw the charge back at the Tories. To say that relief for the lower economic scale is merely tactical, is to miss the point, and to block out the predictions such a move by the chancellor is congruent with. It might also be testament to the fact that the Tories had taken their eye of fairness for those to whom the economic breakdown will affect the most. Further, it could show that the Tories are pulling their “don’t trust a labour government with your money” moves, because their support base has, and is, dropping considerably.

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